An improved method to identify critical processes

Nearly 70% of process improvement projects are failing to provide the expected benefits (Grant 2002). The cost of process improvement projects can be quite substantial and the number of these projects occurring within organisations continues to increase. John Thorp (1998) describes an environment in which managers are struggling to demonstrate the connection between costs and expected business benefits. This eighteen month master's research project has identified a gap in both the academic literature and the business practices of most organisations. This thesis aims to make explicit the selection of processes to improve and to provide the link between process objectives and organisational goals (Davenport 1993; Hammer and Champy 1993). Published literature, coupled with the experience of the research team, has resulted in the development of a targeting methodology for defining and ranking critical processes, and then selecting which of those critical processes to improve first. Although the research team believes that the methodology is applicable to many industries, the research was undertaken in the application hosting centre (AHC) and application service provision (ASP) industry. A focus group and follow on Delphi study was used to ensure that the processes and functional area focused upon was of importance to the participants of the research. This research project was funded by the Australian Research Council's Linkage projects and undertaken with support by REALTECH. The participants included the top three information systems outsourcing companies in Australia and another in the top ten of this industry. The study commenced with identifying critical processes in the ASP environment. This involved both a focus group session and a Delphi study. The Delphi study was followed by four action learning cycles using case studies (action, observe, reflect and revise). These action learning cycles using case studies have revealed that the methodology (which includes the steps to implement the methodology) meets the needs of organisations to identify and select 'critical' processes for improvement. It provides business and researchers with a logical and explicit method to reduce the 'squeaky wheel' and 'latest fad' approaches to process improvement projects. These prior approaches improve processes not necessarily critical for achieving organisational goals consuming limited resources for little gain. The targeting method makes the alignment of process objectives with goals by explicitly linking processes to organisational goals possible. The limitations of this research project are that it does not intend to verify the achievement of business benefit, document the change to an organisation due to its use of the targeting methodology or determine the long term benefits to an organisation using the targeting methodology. These questions might be answered in a longer and larger study as this project is limited to an eighteen month time frame. As for generalisability, the study has focused on the AHC and ASP industries, and the participants, while operating within this industry, are quite different. For the different phases of this project the participants come from in-house providers, multinational outsourcing providers, commercialised government providers, specialist niche product providers, and enterprise system suppliers.